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Brian Abbott

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  • A 60/40 Portfolio Without U.S. Treasuries Or U.S. Large Caps [View article]
    I appreciate the comments. Floating rate is a good idea for alternative bond. But if 60 percent bond is too risky, why are people so comfortable in equities? That sounds like as much a bubble as bonds
    Jan 22, 2013. 05:16 PM | Likes Like |Link to Comment
  • Discounting Everything By 30% [View instapost]
    Micheal- thanks for commenting.

    Another point of clarification is the the "delta" would be one third where estimates are concerned. Obviously a company like Intel has a lot of momentum and maybe long term contracts so I wouldn't discount all of that. What I would discount are incremental changes that rely to some degree on unverifiable estimates - that is where the cognitive biases creep in. So on something like an overall EPS estimate I wouldn't change by 30%, but if there is a list of speculative guesses for things that add up to 5% or 10% of the incremental growth - perhaps that portion should be discounted by 30% (usually downward).
    Jan 22, 2013. 11:16 AM | 1 Like Like |Link to Comment
  • The 'Too Big Of A Market Cap Stock' Theory [View article]
    the financial theory would be that going forward, the market is predicting that said firms will destroy capital. I am holding INTC, but the valuation makes me nervous that the market knows something I don't
    Jan 20, 2013. 12:26 AM | 2 Likes Like |Link to Comment
  • Can You Retire With A $1,000,000 Portfolio? An Urgent Follow Up [View article]
    Please.... tell us more about how it should be.
    Jan 16, 2013. 10:40 PM | 2 Likes Like |Link to Comment
  • Using The Leverage Of Long-Term Bonds In Your Portfolio Allocation [View article]
    under my theory, I wouldn't reallocate the money into equity but partially into cash and partially into some other type of alternative investment. Or perhaps a less-volatile equity such as value investment with higher yield.
    Jan 11, 2013. 08:57 PM | Likes Like |Link to Comment
  • 2012 Permanent Portfolios Performance Review And Outlook [View article]
    the genius thing this fund manager did is keep one fourth in cash and another fourth in bonds at all times and yet kept charging a typical expense ratio. True, even money market funds have their expenses, but an individual investor even with a small amount of money could invest the minimums in much cheaper options elsewhere. But I guess their value proposition is simplicity so I can understand why people like it.
    Jan 11, 2013. 04:44 PM | 1 Like Like |Link to Comment
  • Hey Goldman: What A Foolish Gesture Says The Intelligent REIT Investor [View article]
    I don't know, P/FFO of 20 sounds pretty steep. That would be terrible for a private real estate transaction. maybe one can make management and efficiency of scale and liquidity arguments to justify it, but for a 2.4% yield, the upside doesn't sound outstanding.

    I guess if one had long-term holdings and capital gains considerations, and a much lower cost basis giving a higher effective yield on investment, maybe that would alter the equation.
    Jan 11, 2013. 01:44 PM | Likes Like |Link to Comment
  • Selling Covered Calls On Most ETFs Guaranteed To Lose You Money In The Long Run [View article]
    The only way i acquire shares is through exercises in my put-writing program, and the only way I sell them is through selling covered calls that occasionally get exercised. I haven't bothered to calculate returns, but the equity curve of my portfolio is very satisfying to me. I use the strike prices of the puts and calls as functionally the same as limit orders. As long as you are identifying companies that are solidly run with limited leverage and good balance sheets, this can be a fantastic strategy. (energy sector has been the most successful for me). It has worked so well that I simply refuse to just outright buy a stock with a buy order. I will only acquire it through selling an out of the money put. it gives an additional discount to the current price.
    Jan 11, 2013. 01:35 PM | 1 Like Like |Link to Comment
  • Using The Leverage Of Long-Term Bonds In Your Portfolio Allocation [View article]
    that's definitely a cautious way to play it. One thing painful about that approach is that returns in shorter durations are getting so low that the expense ratio ends up eating a quarter, half, or more, of total returns. But even holding it in money market funds suffers that problem.

    Expense ratio was part of my thought process here.... by going further out in duration and getting a better yield (which I didn't even include in my analysis, by the way - but you can get 3+% in treasuries, and 4% in investment grade long-terms), the expense ratio as a fraction of yield becomes even smaller compared to a more average duration or short duration fund in your case- yet another type of favorable leverage, if you will. Plus, you are paying the expense ratio on an even smaller dollar allocation if you follow the approach I outlined. Thanks for reading and commenting.
    Jan 10, 2013. 02:35 PM | Likes Like |Link to Comment
  • Using The Leverage Of Long-Term Bonds In Your Portfolio Allocation [View article]
    I'd love to backtest. The simplest way might be to just pick arbitrary 1, 3 and 5 year static returns without assuming rebalancing etc. Funny... some people want the backtesting, and others downplay it once you present it. With the run that bonds have had I bet the backtest would look good, but the criticism would be that it wouldn't include a time of rising interest rates. (But those same critics have been saying rates would rise for several years now.... they'll be right eventually, I guess!)
    Jan 10, 2013. 02:30 PM | Likes Like |Link to Comment
  • A Retirement Income Portfolio [View article]
    in order for the cost basis to be reduced, doesn't that mean you were just getting return of capital?
    Jan 6, 2013. 09:11 PM | Likes Like |Link to Comment
  • Picking Goldman's Brain for Long / Short Strategies [View article]
    do REITs take out mortgages tied to individual properties, or are they paying cash for individual properties and raising that cash via debt sold through the capital markets (or through equity issuance)?
    Jan 5, 2013. 11:38 PM | Likes Like |Link to Comment
  • Can You Retire With A $1,000,000 Portfolio? An Urgent Follow Up [View article]
    it is like an annuity that doesn't deplete. it's only a return of capital because the returns of all asset classes are lower than when the fund was designed.The concept of using including non-traditional, endowment-style asset classes in a retirement fund that also pays monthly distributions is a novel concept. You could get someone like Fidelity or even Goldman Sachs to do this, only for a much higher fee, and of course their returns won't be any higher because we are in a low return environment. The ROC isn't a flaw of the fund, it's just a symptom that we're in a low return environment. Anyone living off their self-managed retirement assets would end up in the same situation, but they'd have to sell assets themselves to maintain equivalent payouts compared to what this fund products.
    Jan 5, 2013. 08:56 PM | 2 Likes Like |Link to Comment
  • Can You Retire With A $1,000,000 Portfolio? An Urgent Follow Up [View article]
    I have put the bulk (90%) of our asset's into Vanguard Managed Payout fund (VPDFX), since it pays out a monthly check. If I die first, my wife will have access to nice monthly checks and no need to rebalance, sell assets, or anything else - except to pay estate tax if we get to that level of assets. I have told her repeatedly to never put the money in the hands of an advisor, to live off those monthly deposits. Until then, I continue teaching her about allocations and the need to have the right mix. I even have an investment policy statement for both of us with our wills.

    Check out VPDFX and the other two payout funds offered by vanguard. They have a mix I like way more than other retirement funds - includes 10% commodities, 10% REITS, and 15-20% in a long/short hedge-style fund, along with the other usual suspects. It's an endowment-style allocation.
    Jan 5, 2013. 12:46 PM | 6 Likes Like |Link to Comment
  • Have Asset Classes Really Become More Correlated Since The 2008 Financial Meltdown? [View article]
    yes, they were daily correlations. (In an older analysis I used weekly, but had to obtain the primary data and run it through a stats program.) The online correlation sources don't give you a choice other than daily on the ones I've seen.
    Jan 2, 2013. 01:28 PM | Likes Like |Link to Comment